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The Influence of Board Diversity, Board Diversity Policies and Practices, and Board Inclusion Behaviors on Nonprofit Governance Practices

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Abstract

This study examines how and when nonprofit board performance is impacted by board diversity. Specifically, we investigate board diversity policies and practices as well as board inclusion behaviors as mediating mechanisms for the influence of age, gender, and racial/ethnic diversity of the board on effective board governance practices. The empirical analysis, using a sample of 1,456 nonprofit board chief executive officers, finds that board governance practices are directly influenced by the gender and racial diversity of the board and that board inclusion behaviors together with diversity policies and practices mediate the influence of the board’s gender and racial diversity on internal and external governance practices. Additionally, we found an interaction effect that indicates when boards have greater gender diversity, the negative impact of racial diversity on governance practices is mitigated. The findings suggest that board governance can be improved with more diverse membership, but only if the board behaves inclusively and there are policies and practices in place to allow the diverse members to have an impact.

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Acknowledgments

The authors thank BoardSource for providing us with the data from the 2012 Governance Index Survey for Chief Executives and the two anonymous reviewers for their suggestions to improve the manuscript.

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Authors and Affiliations

  1. Weatherhead School of Management, Case Western University, Cleveland, OH, USA

    Kathleen Buse & Diana Bilimoria

  2. School of Business, Pacific Lutheran University, Tacoma, WA, USA

    Ruth Sessler Bernstein

Authors
  1. Kathleen Buse
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  3. Diana Bilimoria
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Corresponding author

Correspondence to Kathleen Buse.

Appendix: Study Measures

Appendix: Study Measures

Construct

Measurement

Scale

Age diversity

Compiled using Blau (1977) Method where

BIAge = 1 − Σ(p i )2

p is the percent of each age group, and i is the number of groups. Continuous 0–1.0

1 = Under 30

2 = 30–39

3 = 40–49

4 = 50–64

5 = Over 65

Gender diversity

BIGender = 1 − [(pf)2+(pm)2]

p is the percent of each gender group, f is female and m is male. Continuous 0–0.5

1 = male

2 = female

Racial/ethnic diversity

BIRace = 1 − Σ(p i )2

p is the percent of each racial group and i is the number of groups. Continuous 0–1.0

CEO reported total number of board members and total number of each racial/ethnic group: Caucasian, African-American, Hispanic, Pacific/Hawaiian

Asian, American-Indian/Alaskan, and two or more races

Board diversity policies and practices

Has your organization or board done the following?

1 = Yes or 2 = No for each question

P&P = ΣAll responses

1. Incorporated diversity into the organization’s core values

2. Modified organizational policies and procedures to be more inclusive

3. Conducted diversity training for staff

4. Conducted diversity training for board members

5. Developed a detailed plan of action for the board to become inclusive

6. Evaluated and modified its recruitment efforts specifically to reach members with more diverse backgrounds

7. Actively recruited board members from diverse backgrounds

8. Discussed the values and benefits of expanding diversity of the board

Board inclusion behavior

Please rate the extent to which board members from diverse backgrounds work together and interact with one another

1 = Not at all

5 = Great extent

1. Board members initiate social interactions with members’ from diverse backgrounds

2. Board members value the contributions of diverse members to the board’s tasks

3. Diverse members participate in developing the board’s most important policies

4. Members take a personal interest in board members from diverse backgrounds

5. Diverse members make contributions to the board’s critical tasks

6. Diverse members become friends with the other members of the board

7. Diverse members are influential in the board’s routine activities

8. Diverse members share their personal ideas, feelings, and hopes with other members of the board

Internal governance practices

Grade your board’s performance in the following areas

1 = Fail

5 = Excellent

1. Understanding your organization’s mission

2. Strategic planning and thinking strategically

3. Knowledge of your organizations programs

4. Monitoring organizational performance and impact

5. Legal and ethical oversight

6. Financial oversight

7. Evaluating the chief executive

8. Providing guidance and support to the chief executive

9. Understanding the board’s roles and responsibilities

External governance practices

Grade your board’s performance in the following areas

1 = Fail

5 = Excellent

1. Fundraising

2. Community relations and outreach

3. Recruiting new board members

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Buse, K., Bernstein, R.S. & Bilimoria, D. The Influence of Board Diversity, Board Diversity Policies and Practices, and Board Inclusion Behaviors on Nonprofit Governance Practices. J Bus Ethics 133, 179–191 (2016). https://doi.org/10.1007/s10551-014-2352-z

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